Having a background in sociology, philosophy, and economics, I'm going to try to give this blog a pretty broad scope. Going from finance and economics, to geopolitics and world news, to the occasional academic or theoretical post.
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Fed Chairman Ben Bernanke addressed a crowd gathered at the New York Economic Club’s annual meeting, where he touched on the fiscal cliff, warning that the economy could fall back into recession unless Washington policymakers reached some compromise. Bernanke also explained that the Fed’s extraordinary monetary policy of quantitative easing has been effective, and that they will continue to use all their tools to combat economic stagnation.

Finally, the Chairman made no mention of a possible transition into a new type of forward guidance, tied to economic indicators rather than a time frame, as Vice Chairwoman Janet Yellen had argued previously.

UPDATE – 1:15PM:During the Q&A session, Bernanke was asked about his views on future guidance, where he explained that their communicative strategy is “one of the main tools” the Fed has to influence interest rates when they have been pushed to zero. While he acknowledged the FOMC was considering the effectiveness of tying guidance to economic indicators, he noted monetary policy is a complicated thing and it may be difficult to juggle those many factors and then communicate them effectively.

Bernanke addressed economists but indirectly spoke to Washington policymakers on Tuesday, asking them to protect the economy from the fiscal cliff and another debt ceiling debacle. The Chairman said:

Congress and the Administration will need to protect the economy from the full brunt of the severe fiscal tightening at the beginning of next year that is built into current law–the so-called fiscal cliff.

The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery–indeed, by the reckoning of the Congressional Budget Office (CBO) and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession.

Bernanke begged Washington to address the issues without implementing substantial spending cuts in the near term that would only add further headwinds to the economy.

Interestingly, the Chairman made no mention of the new forward guidance that was proposed by San Francisco Fed Chief Janet Yellen. Last week, the Fed released minutes for the mid-October FOMC minutes where they agreed to analyze the possibility of enhancing or replacing their current forward-guidance for zero-bound interest rates.

The Chairman did admit that the Fed believes the current unemployment rate of 7.9% is still between 2% and 2.5% above what the FOMC is comfortable with. This suggests a transition toward a new guidance could include a measure of the unemployment rate around 4.5% to 5%.

On current monetary policy, Bernanke repeated that the Fed has done a lot and will continue doing so, but that the Fed can’t solve very problem.

In announcing [the Fed’s latest policy] decision, we also indicated that we would continue purchasing MBS, undertake additional purchases of longer-term securities, and employ our other policy tools until we judge that the outlook for the labor market has improved substantially in a context of price stability.

Equity markets were marginally negative as the Fed Chairman began to speak, and then fell hard. By 1:19 PM in New York, the Dow was down 0.5% to 12,736 points, while the yield on 10-year Treasuries stood at 1.65%. Gold was down 0.6% to $1,724.30 an ounce, while major banks like Morgan Stanley, Citigroup, and Goldman Sachs were all down less than 1%.

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